By Kyle Peterson
CHICAGO (Reuters) - BOEING (BA.NY)Co
Boeing had hinted at the acceleration previously, but confirmation of the improved market outlook sent shares 2.23 percent higher to $72.45. Shares of the company, a Dow component, notched a 21-month high on Friday.
"Market improvement and our conservatively managed approach to production have put us in a position where we see it necessary to raise aircraft output," said Boeing Commercial Airplanes Chief Executive Jim Albaugh, in a statement.
Boeing said it sees 2010 as a year of economic recovery and that airlines are likely to return to profitability in 2011.
Boeing, which is boosting rates on its 777 aircraft to seven per month from five per month, will make that change in mid-2011 rather than early 2012 as originally planned.
The company also plans to increase the rate of its 747 production to two airplanes per month from the current 1.5 planes. That increase will take effect in mid-2012 rather than mid-2013.
The global airline industry has been battered by an economic downturn that drained travel demand and caused some carriers to postpone or cancel airplane orders. But evidence is mounting that the industry has weathered the worst of the storm.
The International Air Transport Association last week cut its estimate of the 2009 industry loss to $9.4 billion from December's $11 billion and said airlines are recovering strongly from the crisis, as passengers, freight and pricing power return.
"We're awash in news that the commercial aerospace outlook is improving," said Alex Hamilton, senior aerospace analyst at C.K. Cooper & Co.
"The demand is coming back," Hamilton said. "We're seeing traffic improve."
He said the improved industry outlook also reduces the chance that Boeing will need to cut production rates on its hot-selling single-aisle 737 plane.
Boeing, which gets paid when it delivers aircraft, said the production rate for the two wide-bodied would not affect 2010 financial results.
(Reporting by Kyle Peterson; Editing by Lisa Von Ahn, Dave Zimmerman)
